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McDonald's Outgoing CEO 'Very Concerned' About Southern Europe

By Annie Gasparro McDonald's Corp.'s (MCD) outgoing chief executive, Jim Skinner, says that austerity measures in Southern Europe remain a major issue for the fast-food giant's business there. Still, Mr. Skinner is confident the management team taking the helm when he steps down Saturday can battle through the economic turmoil just as he did in the U.S. a few yeas ago. "When I look at it from the McDonald's [perspective], we are very concerned about the austerity around Europe, especially in Southern Europe," Mr. Skinner said in a CNBC interview. He says the U.K. and Russia continue to do well, but France is also starting to have some trouble. Focusing on affordability will be key to McDonald's success in this environment, he said. "We are still taking market share, so we are doing better than the rest, but Europe has got a long slog ahead of itself," Mr. Skinner said, adding that he is "fairly confident in the European Union and the central bank there." McDonald's isn't only facing headwinds in Europe, though. It's U.S. business is also struggling, posting lower-than-expected same-store sales growth in May. "I don't think U.S. [same-store sales] have bottomed out for the year," Mr. Skinner said. Same-store sales "are slowing a bit in the U.S. because of headwinds from economic issues, but that's nothing that's not going to be able to be cured by having the right marketing plans in place around everyday affordability." He said his successor, current Chief Operating Officer Don Thompson, is already working on attracting the cost-conscious consumers. McDonald's recently debuted a new "extra value menu" that includes items such as a 20-piece Chicken McNuggets for $4.99. McDonald's shares have fallen 11% so far this year to about $88.86, after reaching all-time highs above $100 in January. Since Mr. Skinner announced his retirement in early April, the shares have dropped about 16%, but he expects the decline has nothing to do with his departure. "Around the world, the economic environment is not very good anywhere, but we are prepared to perform just as well during this as we have in the past," Mr. Skinner said. He also expressed his general opposition to the idea that members of the government are "trying to legislate behavior," with proposals for large drink bans and other restrictions. "It doesn't work; it won't work, and I think it's bad form," he said. Mr. Skinner is leaving McDonald's after 41 years on Saturday. The company will report its results for the second quarter--its final three months under Mr. Skinner's leadership--in late July. Write to Annie Gasparro at annie.gasparro@dowjones.com